See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/323758565

Relational Capital and financial performance: an empirical analysis on a

sample of Italian firms

Article in Problems and Perspectives in Management · March 2018

DOI: 10.21511/ppm.16(1).2018.24

CITATIONS READS

16 920

3 authors, including:

Gianpaolo Iazzolino
Università della Calabria
60 PUBLICATIONS 934 CITATIONS

SEE PROFILE

All content following this page was uploaded by Gianpaolo Iazzolino on 28 January 2022.

The user has requested enhancement of the downloaded file.

“Relational Capital and financial performance: an empirical analysis on
a sample of Italian firms”

Gianpaolo Iazzolino https://orcid.org/0000-0001-9756-1223

AUTHORS Federica Chiappetta
Stefano Chiappetta

Gianpaolo Iazzolino, Federica Chiappetta and Stefano Chiappetta (2018).

Relational Capital and financial performance: an empirical analysis on a
ARTICLE INFO
sample of Italian firms. Problems and Perspectives in Management, 16(1),
245-258. doi:10.21511/ppm.16(1).2018.24

DOI http://dx.doi.org/10.21511/ppm.16(1).2018.24

RELEASED ON Wednesday, 14 March 2018

RECEIVED ON Saturday, 25 November 2017

ACCEPTED ON Thursday, 08 February 2018

LICENSE This work is licensed under a Creative Commons Attribution 4.0

International License

JOURNAL "Problems and Perspectives in Management"

ISSN PRINT 1727-7051

ISSN ONLINE 1810-5467

PUBLISHER LLC “Consulting Publishing Company “Business Perspectives”

NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES

40 3 12

businessperspectives.org

BUSINESS PERSPECTIVES
LLC “СPС “Business Perspectives”
Hryhorii Skovoroda lane, 10, Sumy,
40022, Ukraine
www.businessperspectives.org
Received on: 25th of November, 2017
Accepted on: 8th of February, 2018
© Gianpaolo Iazzolino, Federica
Chiappetta, Stefano Chiappetta, 2018
Gianpaolo Iazzolino, Ph.D., Assistant
Professor in Business Economics,
Department of Mechanical, Energy
and Management Engineering,
University of Calabria, Italy.
Federica Chiappetta, M.Sc.,
scholarship holder in Business
Economics, Department
of Mechanical, Energy and
Management Engineering, University
of Calabria, Italy.
Stefano Chiappetta, M.Sc., Analyst of
CRM Systems Everis Italia SpA, Italy.
This is an Open Access article,
distributed under the terms of the
Creative Commons Attribution 4.0
International license, which permits
unrestricted re-use, distribution,
and reproduction in any medium,
provided the original work is properly
cited.
Problems and Perspectives in Management, Volume 16, Issue 1, 2018
Gianpaolo Iazzolino (Italy), Federica Chiappetta (Italy), Stefano Chiappetta (Italy)
Relational Capital and
financial performance:
an empirical analysis on
a sample of Italian firms
Abstract
The aim of this paper is to study the relations existing between the relational capital,
both internal and external, and the firm financial performance. The investigation has
been carried out on quantitative and qualitative data extracted from a sample of 100
Italian large firms. The paper deeply analyzes the dimension of the internal relational
capital, not so widely studied in the literature. Findings demonstrate the influence of
the internal relational capital (IRC) and of the external relational capital (ERC) on per-
formance. The research suggests that an effort has to be devoted not only to improving
relations with external stakeholders, but also to developing intra-firm relations. The re-
search contributes to studies in management and in particular in internal organization
by demonstrating that designing and implementing systems for supporting internal
relation can improve firm performance.
Keywords intellectual capital, relational capital, financial
performance, AIDA
JEL Classification C10, M12, M41
INTRODUCTION
It is globally recognized that intellectual capital represents the key re-
source for economic improvement and growth and has an important
role in the evaluation of firm performance (Alipour, 2012; Youndt et
al., 2004; Stewart, 1997; Thurow, 1999; Petty & Guthrie, 2000; Bontis,
2001; Zambon, 2013; Iazzolino & Migliano, 2016).
The debate about intangible assets or for example the intellectual capi-
tal (IC) started with Edvinsson and Malone (1997) and Sveiby (1997)
and has not been settled yet. Scholars and practitioners tend to agree
on the idea that human capital (HC), structural capital (SC) and rela-
tional capital (RC) are the main components of the IC. The structure
of the firm’s IC is not the only open point of the debate. The relation-
ship between IC and firm’s performance is also a crucial point.
More and more scholars have shown an interest in this topic and have
started to carry out research in order to define the contribution to fi-
nancial performance of the intellectual capital and/or, more precisely,
of its three components.
This paper considers, within the three components of the IC, only
the relational capital and its impact on the financial performance of
the firm. The dimension of relational capital can be considered in the
two forms of external relational capital (ERC) and internal relational
capital (IRC). In this paper, the relation between the relational capital,
245
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

both internal and external, and financial performance is analyzed. The investigation has been carried
out on quantitative and qualitative data, extracted from a sample of 100 Italian large firms.

The paper contributes to research from both theoretical and practical point of view. From theoretical point
of view, it has been demonstrated that a good support to internal organizational relations can improve per-
formance; from practical point of view, firms are suggested to pay attention to designing specific systems
for supporting internal organizational relations, as they can positively impact on performance.

Section 1 describes the literature review. Section 2 describes the methodology, the sample and the in-
dicators used in the research. Results and discussion are included in sections 3 and 4. Next section de-
scribes limitations and future research. Last section concludes the paper.

1. LITERATURE REVIEW strategic point of view (Baiburina & Golovko, 2008;

Knowledge represents the key resource for generat-
ing a competitive advantage and for increasing firm
value. Chen et al. (2005), Phusavat et al. (2011), Tan et
al. (2007), Razafindrambinina and Anggreni (2011),
Wang (2011), Alipour (2012), Maditinos et al. (2011),
Joshi et al. (2013) have developed different frame-
works aimed at analyzing this relation, by consider-
ing the components of the Value Added Intellectual
Coefficient (VAIC) (Pulic, 2000). Other studies were
carried out on firm performance and different ways
for analyzing it (Iazzolino et al., 2013).
Scholars and practitioners have been debating
about the meaning and the economic value of IC
since Edvinsson and Malone (1997) and Sveiby
(1997). They converge on the idea that the IC con-
sists of three groups of intangible assets, respec-
tively, related to:
Huang & Wang, 2008). Demartini et al. (2015) in-
vestigated the relationships between IC, business
performance and sustainability management to
propose a model for measuring and managing in-
tangible assets. A methodology for auditing stra-
tegic resources and dynamics of value creation
is proposed by Battagello et al. (2016). Kianto et
al. (2014) studied the impact of both static (IC as-
sets) and dynamic Knowledge Management (KM)
practices) aspects of organizational knowledge on
the value creation process in organizations.
A methodology to assess the capacity of commu-
nities of innovation to improve the value creation
process was proposed in Grimaldi et al. (2012). A
tool based on system dynamics has been used by
Zakeryet al. (2017) for monitoring and improv-
ing the alignment of firm’s key resources with the
market growth strategy.

• Human capital (HC): experience, knowledge, According to Prahalad and Ramaswany (2000), re-
intellect, behavior, relationship, attitude and lational capital is one of the most important di-
special skills of employees. mensions of the IC. García-Merino et al. (2014),
Vishnu and Gupta (2014), Mention and Bontis
• Structural capital (SC): non-human store- (2013), Cabrita and Bontis (2008), Wang et al.
houses of knowledge existing in organiza- (2014) investigated this specific dimension of IC.
tions, technologies, organization, innovation There are not further empirical evidences analyz-
practices generating value. ing only this component of the IC .

• Relational capital (RC): the value generated by Furthermore, there are very few scientific evi-
inter-organizational relations or relations ex- dences concerning the internal relational capi-
isting between the firm and for example sup- tal. The organizational relational model (Ferioli &
pliers, customers, shareholders and other in- Migliarese, 1996) is one of the available models in
stitutions and individuals. the literature that can allow the intra-organiza-
tional relations to be studied in qualitative terms.
Some papers investigated the relation between in- The relation is intended as a social-economic en-
tellectual capital (IC) and firm value also from the tity between two actors. The organizational rela-

246
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

tion is a link between individuals and/or organiza-
tions (or parts of organizations) aimed to a com-
mon task/objective. The organizational relation
can be analyzed by considering the following four
dimensions (Ferioli & Migliarese, 1996):
The 8 years time horizon is valid for the financial
performance indicators and for 3 (out of 4) vari-
ables of the external relational capital. The other
variables (purely qualitative) are calculated for the
last year of the time frame (2013).

• goals: represent the objectives in a relation; The framework of the research is briefly represent-
ed in Figure 1 below.
• tools: support the relation by improving co-
ordination, communication and information 2.1. Data sources and sample
among its actors;
The sample used for the research is composed by
• organizational rules: represent the standards, 100 Italian firms. The selection was carried out on
tacit or explicit, that define the acceptable be- the AIDA database (Bureau Van Dijk) through the
havior for creating and managing the relation; following research criteria:

• cultural background: represents all the im- • active legal status: only firms still in business;
plicit key assumptions and the shared values
between the actors of the relation. • number of employees: 1,000 or more, at least in
one year of the time horizon;
On the basis on these attributes, it is possible to
evaluate, in qualitative terms, the relationships • sales revenue: 1,000,000,000 € or more, at least
within an organization. Further researches of the in one year of the time horizon.
same authors have deepened the model, describing
some applications (Laise et al., 2005; Migliarese & The reason for choosing big-scale firms is main-
Corvello, 2010). ly due to two factors: (i) big-scale firms invest
in relational capital (and, more generally, in in-
tellectual capital) to a greater extent than small
2. RESEARCH METHODOLOGY firms; (ii) information is more readily available
for larger companies, and this is particularly
The aim of this paper is to identify the relation be- important when identifying elements regarding
tween the different components of the relational relational capital, that is, for its nature, hard to
capital, both internal and external, and the finan- assess.
cial performance of a sample of Italian firms. The
time frame for the analysis is 8 years (from 2006 Through the illustrated criteria, a sample of 151
to 2013). firms was selected. It was reduced to 100 because

Internal relational capital

organizational relational model

Financial performance
External relational capital
qualitative
and quantitative indicators

Figure 1. Research framework

247
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

of lacking data. After that, a deep analysis on the
firms’ websites was carried out.
Then, the overall data sources were:
• The firms’ annual reports (including social
and sustainability reports).
• The firms’ websites.
• The firms’ financial data (collected from the
AIDA database and/or from reports).
2.2. Independent variables
3. Training and development tools: tools and
instruments for employees training and
development.
Goals: they represent the objectives and their
sharing in a relation. They can be divided into:
1. Reporting tools and transparency: reporting
systems and degree of transparency of busi-
ness information.
2. Systems for quality of work: e.g. non-discrim-
ination, reconciliation of private, family and
working life.

In order to express the value of the relational capi- 3. Remuneration and incentive systems.
tal, both internal and external, 8 variables has
been used, 4 for the internal relational capital and 4. Training and development systems: tools
4 for the external relational capital. and means for training and development of
employees.
For evaluating the internal relational capital,
the organizational relational capital (Ferioli & Organizational rules: they represent the stan-
Migliarese, 1996; Laise et al., 2005; Migliarese & dards, tacit or explicit, that define the acceptable
Corvello, 2010) has been used. The internal rela- behaviors and the admissible methods for creating
tional capital consists of qualitative variables only. and managing relations. They can be divided into:
Their value is calculated by using a scale of 1 to 5
with subjective criteria (Table 1). 1. Reporting tools and transparency: reporting
systems and degree of transparency of busi-
Table 1. Scale used for qualitative assessment
ness information.
1 LOW
2 MID-LOW 2. Ethical code.
3 MID
4 MID-HIGH 3. Internal control, safety and health systems:
5 HIGH
internal control and risk management (su-
pervisory organ, guarantees, management of
Variables are: relationships with suppliers and customers)
and tools to ensure safety and health on the
Tools: they support the relation, providing tools to workplace.
establish and maintain it, and they improve cooper-
ation, communication and information between the 4. Statute: policy instrument regulating the or-
subjects of the relation. This variable is divided into: ganization and the functioning of compa-
nies (rules and dispositions valid into the
1. Formal/informal sharing tools: sharing and co- organization).
hesion tools for employees, both formal (meet-
ing, training courses) and informal (team Cultural background: it represents all the implic-
building events, such as football match be- it key assumptions and the shared values between
tween colleagues). the actors of the relation. It can be divided into:

2. Sharing software: information tools for com- 1. Shared values on environment and social re-
munication, sharing information, working sponsibility: shared assumptions in respect of
used by employees. environment and social responsibility (com-

248
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

panies sensitize their employees to pursue ob- of the firm on environmental issues and its
jectives related to these aspects). effort in the reduction of CO2, development
of “green” products, development of employ-
2. Model 231: adoption of an organizational, ees’ awareness on environmental matters;
management and control model (common-
ly “Model 231”) in accordance with Italian - relationships with other stakeholders (hu-
Legislative Decree 231 as of June 8, 2001, No manitarian organizations, sponsorship,
231 as anti-corruption legislation and, in gen- communities, associations): commitment
eral, crimes prevention from people working of the firm in social issues (fundraiser,
in the company. The concept is applicable also foundations), in sponsorships (culture, arts,
to the field of organizational relations inside music, sports), in cooperation with commu-
the companies, because the model pursues nities and/or associations.
principles of fairness and loyalty towards both
external stakeholders and employees. The value of first three abovementioned variables
can be calculated using the AIDA database, while
3. External reputation: external acknowledge- the value of the last one is obtained by calculating
ment for corporate governance (in the respect the average of values assigned to its sub-variables,
of Civil Code or specific certifications). through a subjective and qualitative evaluation,
according to the scale in Figure 2. For both types
The external relational capital is assessed through of relational capital, qualitative variables are as-
the following qualitative-quantitative indicators: sessed with a value referred to the last year (2013).

• total share holdings (in EUR 1000): this item Table 2 summarizes the independent variables.
includes participations in subsidiaries, affiliat-
Table 2. Variables of the internal and external
ed undertakings and parent companies. This relational capital
variable allows to evaluate the willingness of
the firm to construct relationships with other INTERNAL RELATIONAL EXTERNAL RELATIONAL
CAPITAL CAPITAL
organizations from financial point of view;
Tools
1. Sharing software.
2. Formal/informal sharing
• sales revenues/number of employees (in EUR tools. Total shareholdinngs
1000): it expresses the performance of a single 3. Training and development
tools.
employee of the company;
Goals
• growth rate of revenues (as a percentage, calcu- 1. Reporting tools
and transparency.
lated year by year): it expresses, as a percent- 2. Systems for quality
age, the growth/decrease of revenues between of work. Sales revenues/number
3. Remuneration and of employees
two accounting years; incentive systems.
4. Training and development
tools.
• relations with stakeholders: it assesses the de-
Organizational rules
gree of involvement of the company in the re- 1. Reporting tools and
lationships with its stakeholders. It can be di- transparency.
2. Ethical code.
vided into the following sub-categories: 3. Internal control and safety Growth rate of revenues
and health systems.
4. Statute.
- relationships for research, development and
innovation of product/service: level of com- Cultural background Relations with stakeholders
mitment of the company to invest for offer- 1. Shared values on 1. Relationships for
environment and social environmental
ing more competitive products/services to responsibility. sustainability.
2. Model 231. 2. Relationships for research,
customers; 3. External reputation. development and
innovation of product/
service.
- relationships for environmental sustainability 3. Relationships with other
stakeholders.
(environment certifications): level of interest

249
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

2.3. Dependent variables 3. RESULTS

The financial performance variables considered in
In this section, the abovementioned analysis is
this paper are the following: described. All the calculations have been carried
out through IBM SPSS Statistics 22. Only the most
1. EBITDA (in EUR 1000): Earnings Befo- significant results are presented. For further de-
re Interest, Taxes, Depreciation and tails please contact the authors of the paper.
Amor tization.
3.1. Internal consistency analysis
2. EBITDA/Sales (in percentage): it is a very of the internal relational capital
important profitability index at an operat-
ing level of the firm.
variables
The internal consistency analysis of IRC factors
3. EBITDA/Total assets (in percentage): it is has been carried out through Cronbach’s Alpha
useful to assess the profitability of invested in order to verify if each sub-variable gives a real
capital. contribution to the value of the variable it belongs
to. It is possible to say that all IRC variables have
In the following table, the considered variables are a sufficient internal consistency for validating
summarized. reliability.
Table 3. The financial performance indicators
considered 3.2. Correlation analysis

FINANCIAL PERFORMANCE
The correlation between the variables has been
analyzed through the Pearson coefficient. The on-
EBITDA/Total ly correlations with a good significance, but still
EBITDA EBITDA/Sales assets
with a low Pearson coefficient, exist between the
following variables:

2.4. Research and analysis tools • tools and EBITDA, with a correlation coeffi-
cient ρ = 0.219;
The following statistical tools were used for
research: • tools and EBITDA/Sales revenues, with a cor-
relation coefficient ρ = 0.220;
1. Internal consistency analysis of the indepen-
dent variables (Cronbach’s Alpha) and analy- • goals and EBITDA/Sales revenues, with a cor-
sis of the degree of multicollinearity between relation coefficient ρ = 0.239;
the independent variables (Tolerance index
and VIF – Variance Inflaction Factor). • relations with stakeholders and EBITDA/
Sales revenues, with a correlation coefficient
2. Analysis of potential significant relations be- ρ = 0.208.
tween dependent and independent variables
through correlation analysis and multiple lin- The remaining correlation coefficients between
ear regression. dependent and independent variables show lower
values.
In order to take back all variables in a common
and single scale, the normalization min-max has 3.3. Multicollinearity analysis
been carried out for non-qualitative data, reduc-
ing them to the range [1,5], the same used for qual- It has been necessary to carry out a multicollinear-
itative variables. Moreover, the average value on ity diagnosis on independent variables of some
the time frame 2006–2013 has been considered for regression models, as we see later on. The results
non-qualitative variables. follow.

250
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Table 4. Collinearity diagnosis on IRC variables Model 2. Models 2.1, 2.2, 2.3 (relation of ERC to
Financial performance)
Internal Relational Collinearity statistics
Capital variables Tolerance VIF β 0 + β1 ⋅ Total Holdings +
Pi =
Tools 0.455 2.199
Sales Revenues
Goals 0.293 3.416
+β2 ⋅ +
Organizational rules 0.467 2.141 Number of employees
Cultural background 0.606 1.651
+ β3 ⋅ Growth rate of revenues +
Tolerance indices are not high, but at the same + β 4 ⋅ Relations with stakeholders +
time, are not so low to prejudice significant
multicollinearity presence. Moreover, VIF +ε , i = 1, 2, 3.
values are below the acceptable threshold of
collinearity. The variable Pi , i =1, 2, 3, refers to financial per-
formance variables:
In summary, it can be said that there is a certain
degree of collinearity between IRC variables, • P1 = EBITDA (model 1.1 and model 2.1);
but it is pretty low. Therefore, there is a low risk
that these variables affect validity of regression • P2 = EBITDA/Sales revenues (model 1.2 and
models. model 2.2);

It does not exist collinearity within E.R.C. vari- • P3 = EBITDA/Total assets (model 1.3 and mod-
ables, thus regression models for them are valid. el 2.3).
Table 5. Collinearity diagnosis on ERC variables
In the following, the most significant results of
Collinearity statistics the regression analysis are shown. For further
External Relational
Capital variables details please contact the authors of the paper.
Tolerance VIF
Particularly, for each model, there are coef-
Total holdings 0.967 1.034
ficients of determination, results of F-test and
Sales revenues/ estimated partial coefficients of regression, as
0.980 1.021
N of employees
outputs.
Growth rate of revenues 0.936 1.068
Relations with
Table 6. Overview of model 1.2
0.956 1.046
stakeholders
Model overview

3.4. Regression analysis Model R R2 Adjusted Standard

R2 error

In order to build up the regression models, the 1.2 0.328a 0.108 0.070 0.48887
contribution given from IRC and ERC variables to
financial performance has been checked separate- Note: a. Predictors: (constant), Cultural background, Tools,
Organizational rules, Goals.
ly. Each of the following models can be divided in
three sub-models, depending on the considered Table 7. ANOVA of model 1.2
dependent variable:
ANOVAa

Model 1. Models 1.1, 1.2, 1.3 (relation of IRC to Model Sum of df Mean F Sign
squares square
Financial performance)
Regression 2.742 4 0.685 2.868 0.027b
β 0 + β1 ⋅ Tools + β 2 ⋅ Goals +
Pi = 1.2 Residue 22.704 95 0.239 – –

+ β3 ⋅ Organisational Rules + Total 25.446 99 – – –

+ β 4 ⋅ Cultural Background + Note: a. Dependent variable: EBITDA/Sales. b. Predictors:

(constant), Cultural background, Tools, Organizational rules,
+ε , i =1, 2, 3. Goals.

251
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Table 8. T-test and estimation of regression coefficients for model 1.2

Coefficients

Non-standardized Standardized Collinearity statistics

coefficients coefficients
Model T T Sign
Tolerance
Std. Error β VIF

(Constant) 2.426 0.335 – 7.236 0.000 – –

Tools 0.035 0.109 0.046 0.321 0.749 0.455 2.199

1.2 Goals 0.321 0.153 0.376 2.102 0.038 0.293 3.416

Organizational rules –0.227 0.102 –0.314 –2.215 0.029 0.467 2.141

Cultural background 0.051 0.083 0.076 0.609 0.544 0.606 1.651

Note: a. Dependent variable: EBITDA/Sales.

Model 1.2 has a coefficient R 2 = 0.328, better than The regression models are the following:
model 1.1. Moreover, F-test states a significance of
Model A:
0.027, that confirms the presence of at least one
independent variable significant for the model. Tools = β 0 + β1 ⋅ Goals +
Hypothesis confirmed by T-test that identifies two
significant independent variables: + β 2 ⋅ Organisational Rules +
+ β3 ⋅ Cultural Background + ε .
• Goals, with a significance of 0.038 (so less than
0,05) and a regression coefficient β = 0.376, Model B:
that confirms the positive correlation between
this variable and the dependent variable = β 0 + β1 ⋅ Tools +
Goals
EBITDA/Sales, previously emerged; + β 2 ⋅ Organisational Rules +
• Organizational rules, with a significance of + β3 ⋅ Cultural Background + ε .
0.029 (so less than 0.05) and a regression coef-
ficient β = −0.314. This variable has a nega- Model C:
tive impact on the dependent variable of mod-
el 1.2. Organisational Rules = β 0 + β1 ⋅ Tools +
2 β ⋅ Goals + β3 ⋅ Cultural Background + ε .
Model 1.2 demonstrates that the dependent vari-
able is affected from two of the IRC variables. Model D:

3.5. Regression analysis β 0 + β1 ⋅ Tools +

Cultural Background =
on internal relational + β 2 ⋅ Goals + β3 ⋅ Organisational Rules + ε .
capital variables Results from the regression analysis are shown in
In order to measure the real link existing within the following tables.
the variables of IRC, an “internal” regression anal-
Table 9. Overview of model A
ysis has been carried out. Each variable is chosen
as dependent variable of the remaining ones. If Model overview
a variable defined irrelevant in the previous sec- Model R R2 Adjusted Standard
tion influences another variable that instead is sig- R2 error
nificant, it can be assumed that an indirect link A 0.738a 0.545 0.531 0.45976
between the first and the financial performance
Note: a. Predictors: (constant), Cultural background, Tools,
exists. Organizational rules, Goals.

252
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Table 10. ANOVA of model A This indicates that IRC and ERC do not play a rel-
ANOVAa evant role in the determination of firm’s financial
Sum of Mean performance. Thesis confirmed by the results of
Model squares df square F Sign
the regression analysis between IRC and ERC vari-
Regression 24.325 3 8.108 38.358 0.000b ables and financial performance that reveals that:
A Residue 20.293 96 0.211 – –
Total 44.618 99 – – –
• in all models, the determination coefficient
Notes: a. Dependent variable: Tools. b. Predictors: (constant), and F-test and T-test have never reached par-
Cultural background, Tools, Organizational rules, Goals. ticularly significant value; this confirms that
it does not exist particularly relevant rela-
Model A has a coefficient R 2 = 0.738. F-test states tions between IRC and ERC and the financial
a significance of 0.000, thus it exists at least an in- performance;
dependent variable that significantly affects the
dependent variable. T-test confirms that variable • two variables, for each of the relational capi-
Goals, with a significance of 0.000 and a regres- tal, affect, although in a moderate way, some
sion coefficient β = 0.795, is the only significant dependent variables, while the remaining in-
variable of the model. dependent variables result almost irrelevant.
Particular attention need to be paid to the vari-
As regards model A, thus, the variable Goals has a able Sales Revenues/Number of employees, that
significant impact on variable Tools. influences the value of two dependent variables
(EBITDA and EBITDA/Sales). It is clear indeed
that a higher economic productivity per single
4. DISCUSSION employee implies a better profitability for the
company. As regards the other variables:
Findings from correlation analysis demonstrate
that: - Goals positively impacts on EBITDA/Sales.
It is reasonable that an efficient management
• internal relational capital is linked to financial and incentive system gives a contribution to
performance with particular reference to vari- improve profitability at an operating level;
ables Tools and Goals;
- Organizational rules, not significant for
• external relational capital is linked to finan- correlation analysis, impacts negatively on
cial performance with particular reference to EBITDA/Sales. In this case, results of the
variables Sales Revenues/Number of employees multiple regression analysis are considered
and Relations with stakeholders. more reliable. It can be said that, from an
economic point of view, a management sys-
However, the correlations observed between de- tem for internal relations affects more in
pendent and independent variables are moderate. terms of increasing costs than in benefits;

Table 11. T-test and estimation of regression coefficients for model A

Coefficients
Non-standardized Standardized Collinearity statistics
Model T coefficients coefficients T Sign
Tolerance
Std. Error β VIF
(Constant) 0.503 0.311 – 1.616 0.109 – –
Goals 0.897 0.111 0.795 8.111 0.000 0.493 2.027
A
Organizational rules –0.152 0.095 –0.159 –1.602 0.112 0.480 2.085
Cultural background 0.068 0.078 0.077 0.872 0.386 0.610 1.638

Note: a. Dependent variable: Tools.

253
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Table 12. Overall regression analysis results

Type of relational capital Independent variables Influenced variables

of financial performance

Tools → –

Goals → EBITDA/Sales
IRC
Internal relational capital
Organizational rules → EBITDA/Sales

Cultural background → –

Total holdings → –

→ EBITDA
Sales/Number of employees EBITDA/Sales
ERC
External relational capital
Growht rate of revenues → –

Relations with stakeholders → EBITDA/Sales

- Relations with stakeholders positively im- A regression analysis within IRC variables has been
pacts on EBITDA/Sales. A company that carried out because of a certain degree of multicol-
takes care of stakeholders can get better op-linearity between them. This analysis allowed to
erating results than others; clarify some aspects. First of all, each model has
a good coefficient of determination and this con-
• EBITDA/Total assets results to be the only firms the presence of multicollinearity between the
dependent variable that does not have rela- IRC variables, even if it is low. The IRC variables
tions with any independent variables, while are linked among them as in Figure 2. Then the
EBITDA/Sales is the most influenced; two variables Tools and Cultural Background have
at least indirect influence on financial performance,
• Tools, resulting relevant for the correlation because these variables, which in the first regression
analysis, does not have a significant influ- analysis have not directly influenced the dependent
ence on firm’s performance variables in variables, have a direct and significant connection
the multiple regression analysis. Therefore, with the variables Goals and Organisational Rules,
correlations previously evidenced between which are significant for model 1.2.
Tools and financial performance are ran-
dom and not characterized by a relation Each of those relationships can be explained as
of dependence. Also in this case, as for follows:
Organizational rules, regression analysis re-
sults are preferred because more reliable. As • Tools and Goals: using effective tools for sup-
a consequence, it can be deducted that all fi- porting internal relationships can allow bet-
nancial performance do not have link of de- ter results in sharing and achieving goals to be
pendence with Tools. reached, and vice versa;

In Table 11, the results of regression analysis be- • Goals and Organizational Rules: a higher level
tween IRC and ERC variables and financial perfor- of goal sharing allows a system of tacit or ex-
mance are briefly represented. plicit rules accepted from everyone to be easier
defined, and vice versa;

Organizationa Cultural
Tools Goals
l rules background

Figure 2. Results of regression within IRC variables

254
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Internal relational capital

0.512
Tools Goals Financial performance
0.376
0.795

0.398 0.635

0.293 -0.314 EBITDA/Sales

Cultural Organizational
Background rules
0.380

0.208
EBITDA
External relational capital
0.225

Sales / No. Employees 0.231

Relations with
stakeholders

Figure 3. Framework of relations with β coefficients

• Organizational Rules and Cultural Background: As regards the internal relational capital, Migliarese
it is reasonable that a well defined set of rules and Corvello (2010) claim that an organizational re-
makes sharing common values between the lation is coherent only if there is coherence between
actors of a relation easier, and vice versa. Tools, Goals, Organizational rules and Cultural
Background. This statement is aligned with results
Figure 3 shows the complete framework with all achieved in the regression analysis on IRC vari-
the significant relations and their regression coef- ables, in which it has been found that these variables
ficients β . have an impact on each other, directly or indirectly.
Instead, as stated by Laise et al. (2005), the creation
Results of the analysis on external relational cap- of new knowledge does not arise from information
ital are in line with studies carried out by Cabrita already available in a database, but from existing
and Bontis (2008), Wang et al. (2014) and Tseng organizational relations between different actors of
and James Goo (2005), in which this dimension the organization. ICT tools do not play active role in
of intellectual capital has a positive relation with the creation of new knowledge, but they support in-
firm performance. Also researches of García- dividuals belonging to the organization in pursuing
Merino et al. (2014), Vishnu and Gupta (2014), their objective. Consequently, as intellectual capital
Mention and Bontis (2013) founded a similar re- is based on knowledge, it is clear that IRC plays an
lation, with the difference that, in this paper, a important role in the value creation for the compa-
good significance has been found, while in the ny. The presence of intense organizational relations
abovementioned studies the contribution is not between the actors of an organization is a neces-
statistically significant. A common element for sary condition for the knowledge organization to be
many studies of the literature is that a significant defined.
relation exists for a subset of the ERC variables
only. In the studies by Wang (2008) and Yu and A more collaborative environment could im-
Zhang (2008), the relations between the relation- prove business climate and employees’ motivation
al capital and the market value are only partial- (Calabrese et al., 2013). Also Drucker (1999) supports
ly verified. Results of these studies suggest that the importance of IRC by describing the future or-
companies should develop and maintain exter- ganizations as composed by professionals with high
nal relations and, particularly, with customers, autonomy who promote collaboration relationships
as the main source of success for the firm. aimed at achieving the assigned objectives.

255
Problems and Perspectives in Management, Volume 16, Issue 1, 2018

5. LIMITATIONS AND relations also of non-linear type between the vari-

ables that in this paper have been recognized as
FURTHER RESEARCHES not significantly related to each other.
One of the limits of this research is the qualitative
nature of some variables. They have been subjec- For further researches, the internal relational cap-
tively assessed. ital could be evaluated through questionnaires
and interviews. Regarding the external relational
Another limit is related to unavailability of in- capital, it could be useful to use other kinds of in-
formation about indicators that could express in dicators, as well as those already proposed in this
a better way the external relational capital. The study, of qualitative nature, obtainable from other
variables used in this study interpret only partially Databases (DBs) or from accounting tools avail-
that dimension of the intellectual capital. able on companies’ websites.

A further limitation can be considered the choice Finally, the sample of firms could be extended and
of the linear regression analysis: there could exist eventually also classified on a sector basis.

CONCLUSION
This work aims to study the relations existing between (i) internal and (ii) external relational capital to
financial performance of a sample of big-scale Italian companies.

Literature concerning the intellectual capital is surely wide. Many scholars have carried out researches
on the impact of intellectual capital on financial performance and the market value of the firm by using
different statistical methodologies, often achieving contrasting results.

This paper is based on the assumption that, in addition to capital characterized by relations existing
with the external environment, also internal relations have a significant importance for the perfor-
mance of the firm. In this paper, the internal relational capital and its contribution to firm performance
have been deeply analyzed.

Results of regression and correlation analysis show that a relation between the relational capital and
financial performance exists. The study demonstrated the influence of the IRC and ERC on value cre-
ation process. It suggests focusing not only on improving relations with external stakeholders, but also
on paying particular attention on intra-firm relations.

The paper contributes to research from both theoretical and practical point of view. From theoretical point
of view, it has been demonstrated that good support for internal organizational relations can improve per-
formance; from practical point of view, firms are suggested to pay attention in designing specific systems for
supporting internal organizational relations, as they can positively impact on performance.

In particular, the attention of firms should be paid to the variables that impact more directly on finan-
cial performance, as already discussed in section 5.

REFERENCES
1. Alipour, M. (2012). The effect
of intellectual capital on firm
performance: an investigation
of Iran insurance companies.
Measuring Business Excellence,
16(1), 53-66.
2. Baiburina, E. R., & Golovko, T. V.
(2008). Empirical investigation
of intellectual enterprise value
and its factors for big Russian
companies. Corporate Finance,
2(6), 5-23.
3. Battagello, F. M., Cricelli, L., &
Grimaldi, M. (2016). Bench-
marking strategic resources and
business performance via an
open framework. International
Journal of Productivity and Per-

256

formance Management, 65(3),
324-350.
4. Bontis, N. (2001). Assessing
knowledge assets: a review of
the models used to measure
intellectual capital. International
Journal of Technology
Management, 3(1), 41-60.
5. Cabrita, M., & Bontis, N.
(2008). Intellectual capital and
business performance in the
Portuguese banking industry.
International Journal of Technology
Management, 43(1-3), 212-237.
6. Calabrese, A., Costa, R.,
Menichini, T., Rosati, F., &
Sanfelice, G. (2013). Turning
corporate social responsibility
(CSR)-driven opportunities in
competitive advantages: A two-
dimensional model. Knowledge
and Process Management, 20(1),
50-58.
7. Chen, M. C., Cheng, S. J., Hwang,
Y. (2005). An empirical investiga-
tion of the relationship between
intellectual capital and firms’
market value and financial per-
formance. Journal of Intellectual
Capital, 6(2), 159-176. Retrieved
from http://citeseerx.ist.psu.edu/
viewdoc/download?doi=10.1.1.46
7.4731&rep=rep1&type=pdf
8. Demartini, P., Paoloni, M., &
Paoloni, P. (2015). Sustainability
and intangibles: evidence of
integrated thinking. Journal
of International Business and
Economics, 15(2), 107-122.
9. Drucker, P. F. (1999). Knowledge
worker productivity: the biggest
challenge. California Manage-
ment Review, 41(2), 79-92.
Retrieved from http://forschun-
gsnetzwerk.at/downloadpub/
knowledge_workers_the_big-
gest_challenge.pdf
10. Edvinsson, L., & Malone, M.
(1997). Intellectual Capital: Real-
izing Your Company’s True Value
By Finding Its Hidden Brainpower.
Harper Collins, New York, NY.
11. Ferioli, C., & Migliarese, P.
(1996). Supporting organisational
relations through information
technology in innovative organ-
isational forms. European Journal
Problems and Perspectives in Management, Volume 16, Issue 1, 2018
of Information Systems, 5(3),
196-207.
12. García-Merino, J. D., García-
Zambrano, L., & Rodriguez-
Castellanos, A. (2014). Impact
of relational capital on business
value. Journal of Information and
Knowledge Management, 13(1).
Retrieved from http://www.world-
scientific.com/doi/abs/10.1142/
S0219649214500026
13. Grimaldi, M., Cricelli, L., & Rogo,
F. (2012). A methodology to
assess value creation in communi-
ties of innovation. Journal of Intel-
lectual Capital, 13(3), 305-330.
14. Huang, C., & Wang, M. (2008).
The effects of economic value
added and intellectual. Capital on
the market value of firms: an em-
pirical study. International Journal
of Management, 25(4), 722-731.
15. Iazzolino, G., & Migliano, G.
(2016). Positioning firms in
a new business performance
space: an empirical study design
on Euronext listed companies.
Investment Management and
Financial Innovations, 13(4), 106-
119. http://dx.doi.org/10.21511/
imfi.13(4).2016.09
16. Iazzolino, G., Bruni, M. E., &
Beraldi, P. (2013). Using DEA and
financial ratings for credit risk
evaluation: an empirical analysis.
Applied Economics Letters, 20(14),
1310-1317.
17. Joshi, M., Cahill, D., & Sidhu, J.
(2013). Intellectual capital and
financial performance: an evalu-
ation of the Australian financial
sector. Journal of Intellectual
Capital, 14(2), 264-285.
18. Kianto, A., Ritala, P., Spender,
J.-C., & Vanhala, M. (2014). The
interaction of intellectual capital
assets and knowledge manage-
ment practices in organizational
value creation. Journal of Intellec-
tual Capital, 15(3), 362-375.
19. Laise, D., Migliarese, P., &
Verteramo, S. (2005). Knowledge
Organization design: a diagnostic
tool. Human systems management,
24(2), 121-131.
20. Maditinos, D., Chatzoudes,
D., Tsairidis, C., & Theriou, G.
(2011). The impact of intellectual
capital on firms’ market value and
financial performance. Journal of
Intellectual Capital, 12(1), 132-151.
21. Mention, A-L., & Bontis, N.
(2013). Intellectual capital and
performance within the bank-
ing sector of Luxembourg and
Belgium. Journal of Intellectual
Capital, 14(2), 286-309.
22. Migliarese, P., & Corvello, V.
(2010). Organisational relations
in organisational design and
engineering. Int. J. Organisational
Design and Engineering, 1(1/2),
55-68.
23. Petty, R., & Guthrie, J. (2000).
Intellectual capital literature
review: Measurement, reporting
and management. Journal of Intel-
lectual Capital, 1(2), 155-176.
24. Phusavat, K., Comepa, N., Sitko-
Lutek, A., & Ooi, K-B. (2011).
Interrelationships between intel-
lectual capital and performance
empirical examination. Industrial
Management & Data Systems,
111(6), 810-829.
25. Prahalad, C. K., & Ramaswamy,
V. (2000). Co-opting Customer
Competence. Harward Business
Review, 78(1), 79-87.
26. Pulic, A. (2000). VAIC – an ac-
counting tool for IC management.
International Journal of Technolo-
gy Management, 20(5-8), 702-714.
27. Razafindrambinina, D., & Ang-
greni, T. (2011). Intellectual
capital and corporate financial
performance of selected listed
companies in Indonesia. Malay-
sian Journal of Economic Studies,
48(1), 61-77.
28. Stewart, T. A. (1997). Intellec-
tual Capital: The New Wealth of
Organizations. New York: Bantam
Dobleday Dell Publishing group,
Inc.
29. Sveiby, K. E. (1997). The New
Organizational Wealth: Managing
& Measuring Knowledge-Based
Assets. Berrett-Koehler, San Fran-
cisco, CA.
30. Tan, H. P., Plowman, D., &
Hancock, P. (2007). Intellectual
capital and financial returns of
companies. Journal of Intellectual
Capital, 8(1), 76-95.
257
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018
31. Thurow, L. C. (1999). Building
Wealth: The New Rules for Indi-
viduals, Companies, and Nation
in a Knowledge-Based Economic
(1st ed.). HarperCollins, New
York, NY.
32. Tseng, C-Y., & James Goo, Y-J.
(2005). Intellectual capital and
corporate value in an emerging
economy: empirical study of
Taiwanese manufacturers. R&D
Management, 35(2), 187-201.
33. Vishnu, S., & Gupta, V. K.
(2014). Intellectual capital and
performance of pharmaceutical
firms in India. Journal of Intel-
lectual Capital, 15(1), 83-99.
258
View publication stats
34. Wang, J-C. (2008). Investigating
market value and intellectual
capital for S&P 500. Journal of In-
tellectual Capital, 9(4), 546-563.
35. Wang, M. (2011). Measuring
intellectual capital and its ef-
fect on financial performance:
evidence from the capital market
in Taiwan. Frontiers of Business
Research in China, 5(2), 243-265.
36. Wang, Z., Wang, N., & Liang,
H. (2014). Knowledge sharing,
intellectual capital and firm per-
formance. Management Decision,
52(2), 230-258.
37. Youndt, M., Subramaniam, M.,
& Snell, S. (2004). Intellectual
capital profiles: an examination of
investment and returns. Journal
of Management Studies, 41(2),
335-361.
38. Yu, F., & Zhang, L. (2008). Does
Intellectual capital really create value?
IEEE Xplore, November, 18.
39. Zambon, S. (2013). Presentation:
Accounting and business economics:
A conceptual revisitation In Y. Biondi
& S. Zambon (Eds), Accounting and
Business Economics: Insights from
National Traditions (pp. 11-22).
40. Zakery, A., Afrazeh, A., & Dumay, J.
(2017). Analysing and improving the
strategic alignment of firms’ resource
dynamics. Journal of Intellectual
Capital, 18(1), 217-240.